All Hands On Deck

July 31st, 2014

 

 

 

 

 

I was reminded last weekend about the importance of preventative and contingent actions to sustain profitable growth and the uncertainty all managers must navigate through. When a crisis happens, there are leaders and businesses who excel (Johnson & Johnson) and others, who fail very publicly (UBS, RSA, Malaysia Airlines). Organisations prepare for the impact of natural disaster (wind, fire, cyber risk management and catastrophe insurance), what scuppers so many firms and for which they prepare so poorly, is for human failure (poor assumptions, fraud, corruption, greed, mismanagement etc).

In Hollviken, Sweden I chanced upon a group of “Vikings”, a modern day version of the 1958 film cast starring Kirk Douglas, Tony Curtis, Ernest Borgnine, and Janet Leigh, trudging disconsolately off the quay. Upon closer investigation, reality was stranger than fiction. This modern day group of Vikings had  sunk their boat in the neighbouring Canal on route from a neighbouring Vikings museum. With the help of a modern day pleasure craft and their crew, and the brawn of a few hardy Viking men they literally dragged their boat to safety with ropes.  All within one hour. There are four attributes, any business and manager charged with growth must excel at:
Vikings long walk

 

 

 

 

 

 

1. Reduce effects of the crisis first and rapidly 

Vikings sinking ship

 

 

 

 

 

 

 

2. Find the cause of the problem, don’t cast blame

Vikings to the rescue

 

 

 

 

 

 

3. Tell people what happened and get external, qualified help

Vikings nearing safety

 

 

 

 

 

 

 

4. The Leader is the last to leave the boat, his behaviour is an example to his key constituents

In the real world, there are real and perceived crises. There is the loss of a key client who is central to your growth plans. It is painful but it is not a crisis. However a regulatory decision that leaves a mid-sized business liable for a multi-million or billion dollar, euro or pound claim settlement, has a genuine crisis on their hands.

© James Berkeley 2014. All Rights Reserved.

 

Brands Lost In Translation

July 31st, 2014

In beautiful Falsterbo in SW Sweden, a hilarious reminder last week that common sense in one language can be nonsense or even comedic in another. How early, if at all, in your new market entry process do you “road test” your brand names when moving into a new geographic market? This might be water off a duck’s back in consumer retail but you will be surprised how many business in other sectors (financial services, insurance, gaming, luxury) overlook this simple and costly step. Don’t fall into this trap. 

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Cleansing Europe’s Unhealthy Cash Culture

July 31st, 2014

I predict economic hardship in Europe will not truly be over in the worst hit countries (Spain, Portugal, Italy, Greece)  until governments and banks can change the beliefs governing the behaviours and attitudes of small and medium sized businesses and consumers about paying by credit or debit cards rather than cash. In 2014, my circumstantial evidence on trips to these countries is that local banks, hotels, restaurants, transportation, retail, real estate agencies, professional services and so on are turning these societies into a more cash-driven, less transparent and more secretive places to live, work and visit. More, not less income is being obscured from tax authorities today than in 2004, at precisely the point these countries need to broaden and increase their tax bases. Indeed banks in one recent example in Barcelona (Santander, Caixa)  are gouging customers (particularly foreigners) with 3.5% supplementary fees on additional credit card fees, are doing their level best to dis-incentivise a behavioural change . Hoteliers this Summer in many of the smaller independent hotels are actively encouraging cash payments, refusing to offer invoices and I would guess, increasingly hiring employees on a “cash only” paid basis. What we are seeing is the point at which people’s trust and confidence in politicians and banks has reached a nadir.

What is required? Successive governments have tried enforcement tactics but they are not visibly working. Governments, banks and other key constituents need to appeal to the SME business owners and managers’ self-interest and that of their customers. Make it easier and more attractive to pay by credit or debit card (embrace high tech, simple VAT reimbursement process), remove frictional banking costs (excess charges), incentivise transparent billing (corporate tax system, faster settlement with suppliers), offers of increased state investment in local health, education and welfare linked to increased declared income receipts from SME business owners and so forth.  This is a long way from the “macro” political shenanigans in Brussels but until the unhealthy cash culture is changed, economic re-emergence in these countries is going to be painfully slow. After all it is the SME sector that these countries must heavily rely upon to generate revenue, jobs and taxes if they are to emerge from intensive care and stand on their own two feet.

© James Berkeley 2014. All Rights Reserved.

Europe: Ridding the Unhealthy Cash Culture

July 31st, 2014

I predict economic hardship in Europe will not truly be over in the worst hit countries (Spain, Portugal, Italy, Greece)  until governments and banks can change the beliefs governing the behaviours and attitudes of small and medium sized businesses and consumers about paying by credit or debit cards rather than cash. In 2014, my circumstantial evidence on trips to these countries is that local banks, hotels, restaurants, transportation, retail, professional services and so on are turning these societies into a more cash-driven, less transparent and more secretive places to live, work and visit. More, not less income is being obscured from tax authorities today than in 2004, at precisely the point these countries need to broaden and increase their tax bases. Indeed banks in one recent example in Barcelona (Santander, Caixa)  are gouging customers (particularly foreigners) with 3.5% supplementary fees on additional credit card fees, are doing their level best to dis-incentivise a behavioural change . Hoteliers this Summer in many of the smaller independent hotels are actively encouraging cash payments, refusing to offer invoices and I would guess, increasingly hiring employees on a “cash only” paid basis. What we are seeing is the point at which people’s trust in politicians and banks has reached a nadir. This is a long way from the political shenanigans in Brussels but until the unhealthy cash culture is changed, economic re-emergence in these countries is going to be painfully slow.

Time at the Beach Series – Turbo Charging Career Growth

July 21st, 2014

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Why is September and January recruiters’ hottest months? In our daily work, it is easy to get sucked into the minutiae of the work and job. The summer vacation or beach weekend is a very valuable opportunity to reflect for a moment on our careers. What is exciting us, what is boring us, what do we want to do more of and what do we want to abandon. James provides an action list that any ambitious manager or executive would be wise to listen to.

Time at the Beach Series – Boosting Your Self Esteem

July 14th, 2014

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Faced with demands from customers, shareholders, employees, business partners and regulators for short and long-term growth, it is not capital or regulatory issues that are humbling executives, it is a lack of self-esteem. Maintaining a high level of self-worth and self-confidence is critical to business success. We recharge those levels by learning and applying new skills, applying them successfully in our daily work and most importantly, increasing our resilience. Honest reflection at the beach is a great starting point for prioritizing where we need help in the next 12 months and doing something about it. Don’t let the time go to waste.

Only One Direction

July 8th, 2014

24 hours before my Panel Session at the World Gaming Executive Summit in Barcelona and the level of anticipation has reached unprecedented levels….

Harry Styles and his One Direction band mates doing a great warm up!

Time at the Beach Series – The Beaches, Your Most Creative Time in the Year

July 7th, 2014

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Whether it is a weekend in the Hamptons, a vacation on a Greek island or a Maldivian atoll, James offers tips on what executives can do before, during and after your vacation to become more effective and efficient resolving open issues in your work, job and career. After listening to this you might even surprise yourself about the level of power and influence within your control.

Getting Serious About Regulation in Gaming & Lottery Operators

July 7th, 2014

I am in Barcelona this week moderating a session at the World Gaming Executive Summit www.wges.com on market growth and expansion into US, Europe and Asia gaming markets. I have a fabulous panel of CEO’s and senior executives from Sportech Plc, PKR, AG Tech and Lotto 24.

In readiness for the event, I have spoken to an array of senior gaming and lottery figures. I always find it interesting as an “outsider” to reflect on the key challenges and draw comparisons with other sectors. Indeed some of my client’s most valuable results stem from approaches that have worked in other sectors, which perhaps are further advanced (technology, complexity) or seasoned (regulation, market change and so on).

For investors, top management and employees attracted to the global gaming and lottery business, managing change and the impact of evolving regulation is an every day occurence. Yet how different is this to the nuclear, energy or indeed the financial services industry? Over lunch with a substantial private equity investor in the renewables sector, he recently recounted a story about how one recent decision by the Spanish governement had left one sizeable investment “compeletely underwater” for the forseeable future. There is no incentive for the owners to invest further in the business until legal challenges are exhausted and the fund nears its’ exit point.

Where profitable growth and expansion of a business is heavily exposed to “regulatory risk”, I counsel clients that their investment plans must contain the following:

(1) Capital allocation plans must include a “regulatory premium”. Factored into the cost of capital must be a premium commensurate with the level of risk accorded with the investment in that market.

(2) Human resource plans must include a “regulatory contingency”. In other words the higher the regulatory risk and the potential impact on the future of the business, the greater the flexibility (severance terms) and financial resources the business must hold in liquid assets to avoid a short-term change creating a catastrophic impact on the firm’s cashflow.

(3) Fixed asset investments must include a “regulatory risk-weighting”. In other words, fixed assets (gaming or lottery infrastructure, office leases and so forth) should be adjusted to the changing levels of regulatory risk apparent in that market and the impact on the future of the business.

Boards should hold top management accountable for regular oversight of each of these areas. Whether that is done formally, in the form of monthly or quarterly reporting or informally, at the quarterly results stage.

In too many companies, particularly mid-sized businesses in the gaming and lottery sector, regulation and compliance changes are a separate agenda item in Management or Board Meetings. It is not integrated correctly into the capital allocation process, the evaluation of results or even top management’s compensation.

For a sector that has seen seismic impacts of regulation on the industry’s future and its’ wider perception, there is still much progress to made in the Boardroom in providing the right controls over top management’s behaviour.

The Future of The Global Gaming Industry

June 27th, 2014

The Global Gaming Business is in the midst of unprecedented challenges with the convergence of market needs, technology, brands, products offered, methods of sale and distribution (casino, lottery, online, mobile and social gaming). James Berkeley has been joined by 9 gaming leaders to share their perspective on the future of the industry. Click here  http://www.elliceconsulting.com/pdf/The-future-of-the-Gaming-Industry.pdf

Next month, James Berkeley will be exploring these and other issues at the pre-eminent global gathering of industry leaders in Barcelona at the World Gaming Executive Summit http://www.wges.com You can read his thoughts in live blog posts from the event, interviews with key players and an event summary appearing here.